HURRICANE Rita ploughed into the Gulf of Mexico coast early yesterday, lashing Texas and Louisiana with driving rain, flooding low-lying regions, knocking out power to nearly a million people, and sparking fires across the

region.

Rita made landfall at 3.30am EDT (0730 GMT) as a Category 3 storm just east of Sabine Pass, on the Texas-Louisiana line, bringing a six-metre storm surge and warnings of up to 64cm of rain. Within four hours it had weakened to a Category 2 storm, with top winds of 161km/h, as it moved further inland between Beaumont and Jasper.

There were no immediate reports of fatalities, or any detailed word on damage to the area's vast oil refinery industry, though rescuers and search teams in many areas had to wait for winds to subside before venturing out.

About three million people had fled a 800km stretch of the Texas-Louisiana coast ahead of the storm, motivated in part by the devastating toll that Hurricane Katrina inflicted on New Orleans and other parts of the Gulf Coast barely three weeks ago.

Radar estimates put Rita's rainfall so far at 10-25cm, with the highest totals in Texas' Jasper and Newton counties, and there was a lingering threat of flooding due to an expected 2 feet (60 cms) of rain in some areas.

The storm spun off tornadoes as it churned northwest, causing transformers to explode. In Jasper County, north of Beaumont, a house with seven people inside floated in floodwaters after it came off its foundation, said sheriff's communications supervisor Alice Duckworth.

Rita spared the flood-prone cities of Houston and Galveston a direct hit.

"So far, Houston is weathering the storm," Mayor Bill White said. His police department received 28 burglary calls overnight and made 16 arrests - less than a typical Friday night, White said.

Rain drenched parts of New Orleans early yesterday, straining the levee system already damaged by Katrina. Up to 8cm of rain was expected throughout the day, less than had been forecast.

"Overall, it looks like New Orleans has lucked out," National Weather Service Meteorologist Phil Grigsby said.

Heavy rain fell south of New Orleans in low-lying Jefferson Parish, where a tidal surge swamped some neighbourhoods. Residents of Lafitte, a town of 1,600 south of New Orleans, were being evacuated by bus. Fires were reported in and around Houston, including one in a two-story apartment building in southeast Houston that left at least eight units damaged, authorities said. Nobody was hurt, according to District Chief Jack Williams. Several buildings were damaged or destroyed by fire in Galveston, and a blaze broke out before dawn at a shopping complex in Pasadena. There were no immediate reports of injuries.

As the sun came up in downtown Beaumont, a Texas port city of 114,000, the few people who stayed behind emerged from their homes to find some blown out windows, damaged roofs, signs in the street, and scattered trees. There was some standing water, but no major flooding.

The wind was still gusting strongly, but nothing like the 160km/h winds that ripped through early yesterday. A light rain was falling.

While the storm raged, the torches of oil refineries could be seen burning in the distance from downtown Beaumont. Officials had been worried about the storm's threat to those refineries, but the damage was less than had been feared.

Hurricane Rita caused an estimated $2.5bn to $5bn in insured losses in eastern Texas and western Louisiana, catastrophe risk modeler AIR Worldwide said yesterday - far less than had been originally feared, largely due to Rita losing steam before striking the American coast.

AIR said Rita losses will be much lower than those from Hurricane Katrina, which caused insured losses that are estimated at anywhere from $14bn to $60bn.

It also appeared, at least on initially inspection, to have mostly spared the crucial oil refineries at a time when America's supplies of gasoline and other refined products are already stretched.

The oil facilities along the Texas and Louisiana coast represent a quarter of US oil refining capacity and business analysts said damage from Rita could send gas prices as high as $4 a gallon. Environmentalists warned of the risk of a toxic spill. George W Bush, mindful of criticism that he was slow to respond to Katrina, planned to visit his home state yesterday.